Equity Pledge Debt Fund 815
Type: Debt
Target: $6,000,000
Annual Return: 8% - 8.25%
Min-invest Amount: $10,000
Duration: 12 - 18 Months
Offering Amount: $6,000,000 U.S. Dollars
Estimated Return: 8.00% - 8.25% Annualized Return*1
Investment Type: Equity Pledge Loan
Unit Price: $10,000 per Subscription Unit
Offering Date: January 2021
Investment Horizon: 12 - 18 Months
Dividend Schedule: Prepaid before per Period
Special offer: 3%Condominium Purchase Discount*2
*1 8% Annualized Return For Investment of 1-19 Units;8.25% Annualized Return for investment above 20 Units.
*2 3% Condominium Purchase Discount applied to Investor subscripting more than 25 units.
Address: 134-03 35th Ave, Flushing, Queens, NY, 11354
Area: Flushing, Queens, New York
Lot Size: 43,147 Square Ft. (207*259 Ft.)
Zoning: R6, C2-2 (FAR is 4.8 times)
Building Size: 207,105 Square Ft.
Closing Price of Land: $4,000,000 (1998)
Current Price of Land: $58,100,000 (Appraisal from CBRE in Jan,2020)
The developer has purchased an existing building in 1999 at a price of $4 million and has operated this property many years. The proposed architectural plan was approved in October 2020, and the construction began at the end of 2020. Currently, the foundation has completed nearly 50% and the main structure is projected to be finished by November 2021. Walls will be installed from December 2021. Interior décor is expected to be completed at the third quarter of 2023.
The development is a mega mix-used building with 16 floors and a total of 350,000 square feet. After completion, it will contain 14 thousand sf retail space, 16 thousand sf community facilities, a 208-key hotel, and 119 condominiums. The building also includes 196 parking lots.
| Expected Dividend Calendar | |||||||
|---|---|---|---|---|---|---|---|
| Round of Dividend | Round of Investment | Funding Amount | Dividend Date *1 | Counting Date | Ending Date | Dividend Period | Notes |
| First | Phase I | $1,500,000 | No Later Than 2/14/2021 | 2/1/2021 | 8/1/2021 | 6 Months | Pre-Paid Dividend |
| Phase II | $1,500,000 | No Later Than 3/14/2021 | 3/1/2021 | 8/1/2021 *2 | 5 Months | Pre-Paid Dividend | |
| Phase III | $1,500,000 | No Later Than 4/14/2021 | 4/1/2021 | 8/1/2021 | 4 Month | Pre-Paid Dividend | |
| Phase IV | $1,500,000 | No Later Than 5/14/2021 | 5/1/2021 | 8/1/2021 | 3 Month | Pre-Paid Dividend | |
| Second | No Later Than 8/14/2021 | 8/2/2021 | 1/31/2022 | 6 Month | Extension Options Owned by Developer | ||
| Third | No Later Than 2/14/2022 | 2/1/2022 | 8/1/2022 | 6 Month | Extension Options Owned by Developer | ||
*1 In case of holidays and non-working days, the dividend date will be automatically postponed to the next working day.
*2 After the expiration of the first Dividend Period, the developer has the option to extend the borrowing 3 times. If the developer chooses to extend, the investors will receive dividends at the same rate of return during the postponement.
Sufficient Value in the Collateral
According to the appraisal provided by CBRE in January 2020, after completion, the value of the property is estimated in $195 million. (Before the pandemic) the hotel is estimated $77 million, and the rest of the property is estimated $118 million.
Based on the sales projection from the appraisal, the value of 119 condominiums is around $95.5 million; the 208-key hotel is worth $77 million; 196 parking lots have market value about $8.3 million; retail space and community facilities are having market value about $14.2 million. The total sale price of the project property is estimated over $195 million.
Until January 2021, the total approved construction loan amount of the development is $75 million by bank. The developer has invested over $11 million cash into the project.
The short-term loan provided by CrowdFunz Fund 815 is pledged by the borrowing entity’s 100% ownership interest. The developer’s own equity investment is over $11 million, which is 1.8 time of the loan provided by CrowdFunz Fund 815. As of this offering, the value of the developer’s pledged equity is estimated over $70 million. In addition, to protect the interests of fund investors, the developer also provides unlimited personal guarantee in this borrowing.
Prime Location, In Demand Market
The development is in the prime area in Flushing, Queens. The surrounding public transportation is well developed, offering Metro Line 7 and bus lines like Q25, Q34, Q50, and Q19. The tenants can reach various communities in Queens or take trains directly to Manhattan or Long Island. It also takes about 10-minutes driving from the site to JFK airport and 5-minutes to LGA airport.
In recent years, with the flourishing of Asian and Chinese communities, the demands for residential and commercial properties in Flushing have been increasing drastically. Compared with other areas in New York, Flushing is vibrant and growing with a large population density. The real estate market continuously shows its potential, aligning with the boom of regional business environment. According to the data from Trulia and Zillow, the median price of house sold in Flushing is about $508,053, and the median monthly rental price is about $2100.
Transparent Fund Usage, Explicit Exit Strategy
Currently, the architecture plan and bank mortgage have been approved. The foundation has completed nearly 50% and the rest of the funding has been secured. Loan issued by CrowdFunz Fund 815 will be used for the rest of the foundation work. After completion of the foundation, the developer will be funded from the construction loan issued by the bank, Then the developer will be able to pay off loan from CrowdFunz Fund 815.
Seasoned Developer with Approved Experience
The developer has been deeply involved in real estate market of New York City for 20 years. It is well-known and has a good reputation in the local market. Its successful projects in the past are mainly concentrated in Queens. In recent years, it has extended the developments in medium-sized, mixed-use, and residential projects. In addition, the developer has successfully cooperated with CrowdFunz Holding LLC. through CrowdFunz Fund 806 and Fund 808. Both funds are currently under good operations, and the construction progresses are stable. Both funds are projected to exit at the first quarter of 2021. Based on current cooperation, the developer’s past records, its development strength, and business reputation, we believe that CrowdFunz Fund 815 will help create a deeper cooperative relationship and consolidate the developer as the No.1 in the Chinese community in NYC.
| Source of Capital | Percentage | |
|---|---|---|
| Mortgage Originated by bank of China | $75,000,000 | 49.02% |
| Loan Originated by CrowdFunz Fund 815 | $6,000,000 | 3.92% |
| Developer’s Equity Investment | $72,030,000 | 47.06% |
| Total | $153,030,000 | 100.00% |
After financing from CrowdFunz Fund 815, the total source of capital consists of a $75,000,000 first lien mortgage originated by bank, accounted for 49.02%, a $6,000,000 loan originated by CrowdFunz Fund 815, accounted for 3.92%, and $72,030,000 equity investment by the developer, accounted for 47.06%.
In the case of default, CrowdFunz Fund 815 has the right to directly take over the borrowing entity’s 100% ownership interest and the key shareholder’s personal asset, liquidating for investment repayments.
| Use of Capital | Percentage | |
|---|---|---|
| Expenses | ||
| Land Cost | $49,798,656 | 32.55% |
| Construction Cost | $88,551,750 | 57.87% |
| Soft Cost | $2,571,650 | 1.68% |
| Financing Cost | $12,100,000 | 7.90% |
| Total | $153,022,056 | 100.00% |
The developer purchased the existing building in 1998 and kept operating until 2018 , waiting for development opportunity. The value of the property has appreciated nearly 10 times before new development. Currently, the construction loan has been approved by bank and it it expected to be closed soon. Since October 2020, the developer has started excavating and building foundation. By mid January 2021, 50% of the foundation has been completed. According to the schedule, main structure will be finished in May this year. Construction loan will be issued depending on the progress to support the ongoing development.
| Fund Usage | Percentage | |
|---|---|---|
| Underground Construction Cost | By Developer | By CrowdFunz Fund 815 |
| Demolition | $600,000 | |
| Shoring / Pile work | $1,250,000 | |
| Excavating | $4,560,000 | |
| Dewatering | $650,000 | |
| Foundation | $4,600,000 | $6,000,000 |
| Total | $11,600,000 | $6,000,000 |
* Data Provided by Developer
We projected that the total loan originated by CrowdFunz Fund 815 is up to $6,000,000 in four disbursements. The loan is expected to be used for the underground construction cost.
Currently, all the necessary work has been done prior to the construction, including but not limited to: approval of architectural plan, government agencies, environmental test, insurance, demolition, shoring, excavating and support, dewatering and etc. The developer has invested over $10 million cash into this project. The loan issued by CrowdFunz Fund 815 will issue in different phases according to the progress of the foundation. The construction loan from bank will facilitate until completion of the project.
Demographics:
| Zip Code 11354 | |
|---|---|
| Regional Population | 55,200 |
| Median Age | 44.7 |
| High School Education or Above | 73% |
| Ethnics | Asian(63%),White(16%),Latino(16%) |
| Family Median Income | $51,615 |
| White Collar/Blue Collar | 84.9%/15.1% |
| Child-Bearing Family | 25.2% |
| Average Family Size | 2.7 |
| Primary Residence | 39% |
Flushing has great foundation for living and businesses, with convenient traffic, excellent education system and well-developed facilities. The area becomes one of the top choices for many Asian enterprises and residents. Chinese investments and immigrations are extremely active in the area. There are more and more luxury apartments and large shopping malls constructed here, and the communities are experiencing the gentrification and modernization.
The population is diversified in this region. The majority of the residents is Asian; other groups include Latinos, Middle Easterners, Europeans, and African Americans.
The residents in the region are mainly middle-age families with stable income. The average age is 44.7 and ¼ of the families have children. The primary residence rate in the region is only 39%, which indicates strong demand for residential rental. Many new immigrants also make the rental market very hot. Due to the low housing inventory available for sale and high needs of buyers, the house prices are constantly going up. Investing in the real estate market in this region has certain potential.
* Data Source: United States Zip Codes. Org. & Esri Zip Code Lookup，2021.1.
Residential Properties Nearby
From the perspective of residential real estate market, low-to-middle-end condominiums were dominant in transactions before 2010, and only a few luxury residential properties were developed.
After 2010, with significant growth of new population and higher resident’s average income, the residential real estate market has been transforming to be more diversified. The prior inventories available for sale cannot satisfy buyers’ needs in consequence of more middle-to-high-end residential properties being built and sold. As of 2020, the median asking price of residential property is over $800,000. The transactions of low-end condominiums in 2015 was decreased to 40% of the amount in 2011.
* Data Source: StreetEasy, January 2021.
Location:
The surrounding public transportation of the site is well-developed, with a 7-minunte walking distance to the subway station of Metro Line 7 and a 10-minute walking distance to LIRR train station, allowing passengers to take 30 minutes to Manhattan and Long Island. It takes about 2 minutes to walk to main bus lines nearby and takes 20-minute driving to JFK airport.
Transportation:
Subway: 7 (About 7-min Walking)
Bus: Q19、Q20、Q25、Q34、Q50(About 2-min Walking)
Train: LIRR：Flushing Main Street Port Washington(About 2-min Walking)
To Midtown Manhattan: 11 Miles (About 30-min Driving)
To JFK Airport: 8.7 Miles (About 20-min Driving)
To LGA Airport: 2.7 Miles (About 5-min Driving)
Nearby Schools:
There is an integrated basic education system in Flushing area, covering many elementary schools, junior high schools, and high schools. The schools can fit the residents 'needs on children's education. There are also many language learning centers and early childhood leaning institutions nearby.
Living Facilities:
Flushing is the largest Chinese–based business area in the Northeast America, which provides residents almost all Asian consumer needs. Large Chinese and Korean supermarkets are plenty distributed in this region; bilingual shopping centers are all over the communities.
Recreation:
There are museums, gyms and entertainment venues nearly. The Corona park is one of the cultural landmarks in this region. There are also New York Hall of Science , New York Badminton Center, National Tennis Center, Queens Museum, Queens Zoo and Citi Field close by.
Developer Company: United Construction & Development Group
Website: https://unitedgroupny.com/
Prior Cooperation: CrowdFunz Fund 806/ CrowdFunz Fund 808
United Construction & Development Group was established in 1990. It focuses on commercial and residential development projects. Led by founder Chris Xu, successfully developed properties are spread in New York City. At present, the developer has worked on over two million square feet of real estate developments, and LIC Skyline Tower is this developer’s masterpiece.
Relying on the successful development track record ,well-seasoned experiences and great commercial credit history , the developer has helped partners and investors generate fortune in return.
Successful Projects By Developer:
Based on approval of architect plan and construction loan combined with efficient fund invested by the developer, the loan originated by CrowFunz Fund 815 is a short-term debt investment which helps the developer fill foundation construction costs.
We believe that the underlying development of CrowdFunz Fund 815 is solid, and we trust the developer’s reputation and credibility. From the perspective of the capital stack in this project, the first lien construction loan debt ratio is below 50%, and the developer 'equity is around $72 million, which is 12 times greater than the loan provided by CrowdFunz Fund 815. And the developer also offers unlimited personal guarantee. The overall investment risk of CrowdFunz Fund 815 is relatively lower than the industrial level.
The whole investment process of CrowdFunz Fund 815 is controlled strictly based on the actual progress of the project into four phases. After completion of the foundation, some available fund will be used for the main structure development to help the developer achieve the goals and control the risk of the debt investment.
| RISK CATEGORY | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Sponsor | |||||
| Experience | 1-3 Years | 3-5 Years | 5-10 Years | 10-15 Years | 15+ Years |
| Tracking Record | 0-3M | 3-10M | 10-30M | 30-50M | 50M+ |
| Credit Score | Low | Accept | Fair | Good | Excellent |
| Financials | |||||
| Investor Equity | 1-20% | 20-30% | 30-40% | 40-50% | 50-60% |
| Loan-to-cost ratio | 85-100% | 70%-85% | 65%-70% | 50-65% | 1-50% |
| Financial claims | Common Equity | Preferred Equity | Equity pledge debt | Secondary lien debt | First lien debt |
| Location | |||||
| Location | Sub Rural | Rural | Regional center | Suburban | Core Urban |
| Walk Score | <40 | 40-55 | 55-70 | 70-85 | 85-100 |
| Supply & Demand | S>>D | S>D | S≈D | S<D | S<<D |
| Property Status | |||||
| Development Phase | 0-20% | 20-40% | 40-60% | 60-80% | 80-100% |
| Property as Collateral | No | Extremely insufficient | Relatively insufficient | Relatively sufficient | Extremely sufficient |
| Investment Term | >48 Months | 37-48 Months | 25-36 Months | 13-24 Months | <12 Months |
Subscription Agreement (Only available to accredited investors)
Appraisal (Only available to accredited investors)